Mortgages Blog

Why have foreclosures dropped?

Foreclosure filings hit a four-year low in 2011, but not entirely for the reasons you'd hope. It wasn't that more people are able to avoid foreclosure, but due, in part, to a processing backlog resulting from the accusations that banks pushed robosigning as a way to get distressed properties through the pipeline quickly without reviewing the documents.

RealtyTrac reported that foreclosure filings slid by 34 percent last year. But as Daren Blomquist, director of marketing communications at RealtyTrac, told CNBC: "A big part that is inflating the size of the decrease is a continuing extended foreclosure process." In other words, the process has lengthened following the 2010 robo-signing allegations, but that doesn't mean the number of foreclosures has necessarily slowed all that much. In fact, Blomquist expects it to pick up a little this year as lenders tackle the backlog.

The foreclosure filings include bank repossessions, default notices and scheduled auctions. Bank seizures actually did drop from 1,050,500 in 2010 to 804,423 in 2011 -- the lowest level since 2007.

Over the past five years, more than 4 million homes have been foreclosed. Low mortgage rates and the government's revamped Home Affordable Refinance Program, or HARP, helped some troubled homeowners refinance, but there are still many who don't qualify and falling home prices continue to erode homeowner equity.

The average length of time to process a foreclosure has continued to increase each quarter, from 305 days in fourth-quarter 2010 to 343 days in fourth-quarter 2011. New York posts the longest average amount of time: 1,019 days in fourth-quarter 2011.

For five years in a row, Nevada has remained the state worst-hit by foreclosures, with one of every 16 homeowners receiving a foreclosure notice last year. Arizona is the second-worst state for foreclosures, followed by California. According to CNN Money, Florida actually improved, moving to seventh-worst, behind Georgia, Utah and Michigan.

With fewer foreclosures on the market, experts say home prices will improve and the market will stabilize. Are you optimistic that things will begin to change for the better in 2012?

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1 Comment

Ray

January 13, 2012 at 9:06 am

1. There's still way too much inventory and shadow inventory to talk about broad based appreciation anytime soon.
2. Incomes after inflation have not started improving. Those that have jobs, at best, are getting cost of living bumps. Many are getting zip, and some are getting pay cuts.

Overall, too much supply and not enough demand for home price improvement (other than pockets).

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